Rosy budget projections undermine city’s evergreen lawsuit

Mayor Ron Nirenberg speaks at the start of the City Council Fiscal year 2018 Budget Goal-Setting Session in the Lonesome Dove Room of the Henry B. Gonzalez Convention Center. City Manager Sheryl Sculley is to Nirenberg's right.

Mayor Ron Nirenberg speaks at the start of the City Council Fiscal...

Last Wednesday’s city budget briefing offered plenty of good news.

Assistant City Manager Maria Villagómez informed council members that general-fund revenues, at the midway point of the fiscal year, are $7.2 million above what was projected in the city budget, while expenditures are $1.6 million below expectations. The city now projects that it will have $13.2 million left over at the end of September.

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The longer-term budget forecast is pretty rosy too. Villagómez said the city budget is structurally balanced and added that over the next five years, general-fund revenue growth is expected to slightly outpace the growth in spending.

All this positive news, however, has a downside for the city.

The budget numbers undermine the central argument of the city’s 2014 lawsuit challenging the constitutionality of the 10-year evergreen clause in its collective-bargaining agreement with the San Antonio Professional Firefighters Association: that the evergreen — by freezing the terms of the most recent labor deal for up to 10 years if a new agreement is not reached — will force the city into debt.

From the beginning, the city has hung its hat on a section of the Texas Constitution which stipulates, regarding cities with more than 5,000 people, that “no debt shall ever be created,” unless a provision is made “to assess and collect annually a sufficient sum to pay the interest thereon and create a sinking fund of at least 2 percent.”

That was the argument that the city’s legal representative, Michael Bernard, made in District Court in November 2015. Bernard offered an expansive definition of the word “debt,” admitting that the evergreen wouldn’t create insolvency, but suggesting that it would bind the city in its ability to fund core services.

Bernard argued that public-safety unions “don’t have a right to contracts in ways that are repugnant to the constitution.”

Visiting District Judge Martha Tanner threw out the city’s arguments, and with good reason.

None of the legal precedents cited by the city involved collective-bargaining deals; the 10-year evergreen had been agreed upon by the city in every collective-bargaining deal involving firefighters going back to 1986; and a 1989 opinion by then-Assistant City Attorney Tom Finlay held that the evergreen did not create debt.

Based on last week’s budget briefing, the city is coping quite well with a clause that it wants the courts to believe is monumentally destructive.

City reps can make the valid point that Villagómez’s budget projections did not factor in council wish-list items such as Mayor Ron Nirenberg’s calls for increasing street-maintenance funding from $99 million to $110 million or the council’s hope to add 25 police officers per year.

But it’s also worth noting that the council was able to give a big boost to street-maintenance spending over the past year, going from $64 million to $99 million, even with that much-derided evergreen clause.

To be clear, I wouldn’t argue with anyone who made the point that a 10-year evergreen is dubious public policy, for both sides (after all, firefighters not only continue to enjoy the rich health-care benefits from a contract that expired four years ago, they also have done without pay raises during that stretch).

But this case, which could wind up in the Texas Supreme Court, came about because the city wanted to make a legal — not a policy — argument. After all, the city challenged the clause’s constitutionality, not its practicality.

The doomsday warnings we heard from the city in court back in 2015 clearly have not materialized. In fact, the biggest fiscal red flag for the city right now is not the firefighters’ evergreen clause, but Gov. Greg Abbott’s January threat to roll back revenue cap increases for local entities from 8 to 2.5 percent. The city would have a better case challenging the constitutionality of that kind of measure.

Ultimately, this lingering evergreen lawsuit looks like the biggest unforced error the city has made during the 13-year tenure of City Manager Sheryl Sculley. An already toxic relationship between the firefighters and the city subsequently degenerated into all-out war.

The relationship hit a new low two months ago when the firefighters launched a successful petition drive to get three charter amendments on the ballot, each of which would severely impair the power of city government to perform its duties.

If the evergreen lawsuit was meant to make a legal point, so far it’s been a failure. If it was meant to scare the firefighters into becoming more compliant, it’s been a bigger failure.